As cannabis has not been produced on this scale until recently, companies have room to develop new ways to produce in a more cost-efficient manner. Companies that can significantly outcompete their peers' production efficiency could see high profit margins when the recreational market opens up. For reference, the average forward EV/EBITDA multiple for 2019 and 2020 is 16.7x and 7.8x, respectively.

As Canada's largest publicly-traded cannabis company, Canopy Growth operates two producing facilities with ~540,000 sq. ft. and has 5.7M sq. ft. in developing facilities. In addition, the Company owns a variety of diverse brands that include Tweed, Spectrum Cannabis, and Bedrocan. Canopy currently serves ~69,000 patients across Canada.

Aurora Cannabis is a licensed producer and seller of medical marijuana and cannabis oil under the ACMPR. Aurora sells its products over the phone, online or through its mobile app and offers a delivery service to its customers. Currently, the Company is engaged in the construction of its new 800,000 square foot production facility in Alberta called Aurora Sky. On January 24, Aurora announced the acquisition of CanniMed Therapeutics Inc. (TSX:CMED) for C$1.1 billion.

Aphria is a licensed producer and supplier of medical marijuana under the ACMPR. Aphria's flagship greenhouse production facility is located on a 169-acre property in Leamington, Ontario. The Company currently produces 9,000kg and plans to expand its production facility to add an additional 90,000kg.

MedReleaf is a licensed producer of medical marijuana under the ACMPR. MedReleaf currently produces 7,000 KG/year out of a 55,000 sq. ft. facility in Markham. The Company started to produce 5,600 KG/year out of a 210,000 sq. ft. facility in Bradford in October. The Company plans to expand its Bradford facility to reach 28,000 KG/year from it by August 2018. The Company has partnered with Shoppers Drug Mart to sell medical marijuana.

CanniMed Therapeutics is a Canada-based company that produces pharmaceutical grade cannabis, licensed under the ACMPR to sell up to 7000kg of medical marijuana to patients. The Company offers a range of cannabis-related products that include cannabis oil, dried cannabis, vaporizers and other related accessories. Aurora Cannabis (TSX:ACB) currently owns 95.9% of CanniMed.

CannTrust is a Canada-based licensed producer of medical cannabis. The Company's products are sold online and delivered to registered patients. CannTrust's original 50,000 square foot production facility located in Vaughan, Ontario uses hydroponic technology to produce at an annual capacity of 3,600 KG. Furthermore, CannTrust has set aside a 46-acre property, where it plans to add capacity with a 430,000-square foot expansion.

As recreational legalization in Canada approaches this summer, the 4 marijuana stocks on our list today have plans to meet the upcoming demand. If the marijuana sector continues its rally, these stocks…are expected to generate significant EBITDA growth over the coming year.

To take advantage of another potential upswing in the market, we have selected 5 cannabis companies, which analysts believe are undervalued. The Canadian marijuana stocks on our list today currently have 100% upside on average according to analysts, indicating that these stocks could post strong returns in the near-term.

As recreational legalization of marijuana in Canada approaches this summer, these companies have plans to meet the upcoming demand. If marijuana continues its rally, the Canadian marijuana stocks on our list could see strong returns in both the short and long term.

The top spot in the Canadian cannabis industry belongs to Canopy Growth Corp. but some competitors, such as Aurora Cannabis Inc., have the scope, scale, and differentiation to take on the market leader. Of these two which stock is more attractive?

Due to the early stages of the cannabis industry and its growth prospects, investors have not expected cannabis companies to generate positive earnings. Instead they have valued the stocks primarily on hope for a lucrative future. That being said, however, we have identified 4 Canadian cannabis stocks that are expected to generate positive earnings in the next 12 months. If they live up to their earnings expectations, it could begin a time when investors look for companies with sustainable growth prospects, as opposed to those that are expected to have the highest short-term revenue growth.

Like technology, the battery metals and cannabis sectors have upside attached to secular trends that are changing our world. As a result, all of these sectors are poised to continue expanding at rapid rates.

Being able to sell products at a high margin is a good sign of efficiency. Doing so leaves more cash to dedicate to other expenses and service debt obligations. Identifying undervalued companies with strong gross margins in the young marijuana industry is important, given the upcoming Canadian legalization of marijuana for recreational purposes in 2018. Today we have identified 4 Canadian marijuana stocks that have underperformed their peers despite healthy gross margins.

Investing in marijuana-related stocks is a high-risk, high-reward game due to all the uncertainties surrounding the legalization of the drug. Companies that do succeed, however, have potential to bring large capital gains. That being said we have identified five Canadian marijuana stocks with the biggest upside potential, according to consensus analyst price targets.

Identifying companies with high gross margins in the young marijuana industry is important because operating costs are likely to decrease as the industry matures, leaving these companies with high earnings potential. Today we have identified five Canadian marijuana stocks with gross margins well above their industry peers.